API welcomes flaring review

API has welcomed the Department of the Interior’s (DOI) proposal to delay certain requirements of the Bureau of Land Management’s (BLM) venting and flaring rule while the agency reviews its cost benefit analysis and makes revisions to the 2016 rule.

America’s natural gas and oil producers have reduced methane emissions from natural gas systems by 16.3% in spite of significant increases – 51% between 1990 and 2015 – in the production of natural gas. Analysis by Environmental Resources Management estimates the added cost of complying with the current BLM rule could result in permanently closing as many as 40% of federal wells that flare because they would be uneconomical to produce. Those closures could reduce the availability of affordable domestic energy to American consumers and electric power companies – a sector whose carbon emissions are near 30 year lows due to the increasing use of natural gas in US power generation.

BLM’s estimates of federal royalties gained as a result of its 2016 rule were projected at US$3 – 10 million/yr, which API believes significantly understates the rule’s potential to impede federal oil and natural gas production and accordingly reduce federal royalties. API estimated that even a 1% loss of royalties could result in lost federal revenues of over US$14 million.

“Natural gas and oil operators across the country share the Interior Department’s objectives of conserving resources and preventing waste,” said API Upstream and Industry Operations Group Director Erik Milito. “While the BLM’s authority in this area is limited, we are taking action through innovation and technology advancements in our operations to successfully capture and reduce methane emissions, the main component of natural gas.

“We welcome BLM’s efforts to get this right and encourage the agency to develop an achievable rule in the months ahead that serves to prevent waste and conserve resources while encouraging energy production on federal lands.”

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